Investors Taking a Shine to Indian Climate Tech Space
The Indian climate tech sector is rapidly attracting investment from both domestic and global venture capital firms, driven by supportive policies and an increasing consumer focus on sustainability. Early-stage investors are particularly active, recognizing the sector's potential for high returns and significant environmental impact.
Global early-stage firm RTP Global, which closed a new $1-billion fund last year, has significantly increased its investments in climate tech startups. In February, RTP Global led an $8.7 million funding round for Varaha, a company focused on offsetting greenhouse gas emissions. This move is part of a broader trend of increasing capital flow into climate tech.
According to Venture Intelligence data, climate tech startups in India raised nearly $157 million across 52 deals in 2023. The momentum has continued in 2024, with $45 million raised through 12 transactions in the first four months alone. Early-stage investor Blume Ventures has two climate tech deals in the pipeline for this year and plans to back 10-15 startups in the sector over the next three to four years.
“Investors follow growth in the (customer) market”, said Arpit Agarwal, partner at Blume Ventures. “We know that businesses and consumers are making the change from carbon-emitting technology to carbon-neutral technology. The reason why VCs are investing is that there is a sense that tomorrow there will be a much larger demand for carbon mitigation technologies”.
Global investors are also increasingly eyeing climate tech as a promising investment area. Eversource Capital, which closed India’s largest climate impact fund in 2022, is reportedly planning to raise at least $1 billion for a new fund to back companies in the water, food, agri-chain, and recycling sub-segments of the broader climate theme. Additionally, former KKR India CEO Sanjay Nayar has teamed up with Peak Ventures, an early-stage firm focused on cleantech areas such as new energy, food systems, clean water, and climate, to enter this space.
“Maturing technologies, deepening research and development capabilities, and a stated push from the government toward a green energy transition are some tailwinds that have converged to provide further impetus to investments in climate tech”, said Manish Advani, vice president at Elevation Capital, which has backed climate tech startups like SolarSquare and SenseHawk.
The Indian climate tech sector's appeal is growing as businesses and consumers alike shift towards sustainable practices. With the continued influx of capital and increasing governmental support, the sector is well-positioned to play a crucial role in the global transition to a low-carbon economy. Investors are betting that the demand for carbon mitigation technologies will only rise, driving growth and innovation in this critical field.
